Follow-up to Alabama Hall of Fame CGA

This should make an important chapter in my online book in the section on sticky ethical issues. As a follow-up to the Alabama case reported in my previous post (http://plannedgift.blogspot.com/2009/08/hall-of-fame-cga-interesting-alabama.html), one of my friends/blog readers called the day after that post with a ripe quite question right on point and one many planned giving folk deal with periodically.

Here is the story (facts altered, of course). Charity already has in hand a check (for hundreds of thousands of dollars), a copy of the durable power of attorney (reviewed - let's assume completely legal), and the agent/attorney-in-fact (a supporter of the org.) ready, wanting and able to sign off on a CGA for her 90+ relative (not parent or sibling).

Legally, there is no question whether this gift is acceptable - at least right now.

What are the questions we should be thinking about based on the reading of the Alabama case?

My first question: does the 90+, obviously incapacitated "donor" have any giving history or other inclination towards the organization? The agent/attorney-in-fact does, yes. The "donor" in this question does not (if she had been, I would have been less concerned about the next questions but would have still asked them).

Next question: do we know anything about the donor's overall estate? Is this a small part of her estate? Is this a large part of her estate? The point I am getting at is whether this "gift" makes sense at all in her overall financial and estate plans.

Most important question: Are there other living beneficiaries (i.e. children - or anyone else who would stand to inherit from the donor besides the agent/attorney-in-fact)?

This is a really tricky situation. My initial response was that they should contact a known financial adviser of the donor (revealed in the power of attorney paperwork) and see what he/she thinks. Problem is that the agent, who is the real donor here of a really major gift, didn't tell them to call this person. Do they start meddling around this person's back - possibly causing the agent to withdraw the offer?

I have to admit that I personally have taken gifts like this through agents. I have even helped a charity orchestrate a "death bed" CGA. But, as far as I can recall, these were always gifts being made by next of kin - those who would have inherited the money anyway. So, even where the donor didn't have a history with the charity, no one was getting "cheated." Here, we weren't sure if the agent was the next of kin or not. And, if there are next of kin, maybe they should be consulted as this "gift" will have a direct impact on assets they would likely have received.

To top this all off, in this year, when numbers are down, this is a really important gift. No one at the organization will be thrilled if it doesn't happen. Problem is: we know that some more due diligence needs to be done or else there may be a surrogate's court taking the money back and possibly a non-flattering story in the New York Post (and not so far off in the future).

Regardless, our job as gift planners - from an ethics point of view - is to do the right thing and not just take suspicious gifts without investigation. And, not to be clouded by the fact that we will take the credit for the gift today. Someone else may have to clean up the mess in years to come and it won't be pretty. This gets back to another of my ethics posts (http://plannedgift.blogspot.com/2009/08/planned-giving-buck-stops-with-us.html), the ends can't justify the means. We have to take the high rode even when it means passing up on oodles money.

In the end, the consensus was to confirm from the agent if there are other next of kin of the "donor," and if there are, to ensure that they are informed of the gift. And, to put a memo in the file detailing this information and writing a letter to the "family" in appreciation for the gift (and put it in the file). If they can't do that - I really doubt this is a proper gift. A tougher attorney may have even required the next of kin to sign off that they are informed and happy with this gift.